Question

Carswell Electronics adopted the dollar-value LIFO method on January 1, 2021, when the inventory value of its one inventory pool was $870,000. The company decided to use an external index, the Consumer Price Index (CPI), to adjust for changes in the cost level. On January 1, 2021, the CPI was 230. On December 31, 2021, inventory valued at year-end cost was $1,045,000 and the CPI was 253.
 
Required:
Calculate the inventory value at the end of 2021 using the dollar-value LIFO method. (Round "Year end cost index" to 2 decimal places.)

Answer 1

date	inventory at  year- end  cost	/	year- end  cost  index	=	inventory  layers at  base  year cost		inventory  layers at  base year  cost	x	year-end  cost  index	=	inventory  layers  converted to  cost	ending inventory DVL cost
1/1/21	870,000	/	1	=	870,000	base	870,000	x	1	=	870,000	870,000
12 /31 /21	1,045,000	/	1.1	=	950,000	base	870,000	x	1	=	870,000
						2021	80,000	x	1.1	=	88,000	958,000

253/230= 1.1

950,000-870,000= 80,000